Planning your estate is more than drafting a trust or will. In fact, there are several essentials you need in place.
Below are 5 important things to prepare when it comes to planning your estate.
A Letter of Instruction
This is a letter for people to read when you pass. It should include information such as where your will and trusts are kept along with all your life insurance, investment, and bank account details.
It’s also a good idea to include the name of your executor, attorney, trustee, and financial advisor along with their contact information. You may also want to include the location of any safety deposit boxes and keys you have and the contents thereof.
Your Will
Your will is the most important document you need when planning your estate. It should clearly detail where you want your property to go when you pass. If you don’t have a will, your affairs are left up to the state’s laws. The state might not make the same choices you would.
In your will, be sure to name an executor or administrator to handle your estate. If you have minor children, you’ll want to name a legal guardian, too.
A Power of Attorney
A durable power of attorney gives someone you assign the ability to act on your behalf when you cannot. If you don’t draft a power of attorney, a court will decide what happens to your assets if you become incapacitated.
What’s more, a power of attorney gives your chosen person the power to make financial transactions, real estate decisions, and a host of other legal decisions on your behalf.
When planning an estate, many spouses like to set up reciprocal powers of attorney. But there are instances where it makes more sense to appoint a friend, relative or trusted advisor to act for you when you’re no longer able to make decisions.
Create a Living Trust
A living trust ensures your wishes are followed once you pass away. It’s also an excellent way to provide for the speedy distribution of your assets to your appointed beneficiaries. As a result, it can help to avoid estate taxes and keep your financial affairs discreet.
You are a grantor with your living trust. This means you maintain control over any property mentioned in the trust while you are alive. When you die, your pre-determined successor trustee takes control of the trust. He or she then has the power to distribute your assets as per your instructions, saving both money and time.
An irrevocable trust also works as solid asset protection, protecting your property from falling into the hands of creditors.
Specify Your Preferred Beneficiaries
Make the effort to keep your beneficiaries up to date on all your investment accounts and insurance policies. If you want to stretch your retirement funds to future generations, make sure that you specifically name the beneficiaries rather than placing it all in a trust.
If you want to leave assets to charity, it’s recommended that you leave Traditional IRA funds to your chosen charities. You can then appoint non-IRA and Roth IRA assets to your friends and family. This offers excellent tax savings, but it’s a complicated process that usually requires professional assistance.
Make Sure Your Affairs Are In Order
As you can see, quite a lot goes into estate planning. It is not simply a case of dividing up your assets upon your death. It’s very much about making sure that your loved ones and other beneficiaries are provided for and can access your assets should you become temporarily or permanently incapacitated.
These are just five essential things you need when planning your estate. An experienced estate attorney can help ensure that all your affairs are in order while you are still alive and ensure that your nearest and dearest are looked after when you pass on.
Book an appointment at Principal Law Firm to discuss your estate today.
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